Copyright 2000 The Washington Post
The Washington
Post
February 3, 2000, Thursday, Final Edition
SECTION: A SECTION; Pg. A01
LENGTH: 885 words
HEADLINE:
Senate Approves Bankruptcy Bill; Industry-Sought Overhaul Passes 83-14
BYLINE: Helen Dewar; Kathleen Day, Washington Post
Staff Writers
BODY:
The Senate
overwhelmingly approved legislation yesterday that would make it harder for
people to wipe out their debts, in a major overhaul of the nation's bankruptcy
system that was sought by the credit card industry but decried by consumer
groups as unfair.
The bill also includes a proposal to raise the hourly
minimum wage by $ 1, to $ 6.15, over three years and to cut a variety of
business taxes by $ 76 billion over the next decade to help employers defray the
costs of increased wages.
Passage of the bill, on an 83 to 14 vote, came
on a day of high-level political gamesmanship that drew Vice President Gore off
the campaign trail in case he was needed to break a Senate tie on a
controversial amendment to block the use of bankruptcy laws by
violent demonstrators at abortion clinics to evade fines and
damages.
With some nose-counts showing a tie was likely, Republicans
abruptly decided not to oppose the amendment and let it pass rather than give
Gore any more big headlines on a high-profile campaign issue. Gore broke a tie
on gun control last year. "With this amendment accepted, nobody will be able to
politically demagogue this issue in the context of true bankruptcy reform," said
Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah).
The bill
itself would make it harder for consumers to wipe out their debts by forcing
more people who file for bankruptcy to do so under provisions requiring them to
repay some debts instead of erasing all their obligations after they've
liquidated their assets.
Despite yesterday's lopsided vote, the future
of the bankruptcy bill is uncertain. The House has already approved similar
legislation without any minimum wage and tax provisions. There are also
differences over bankruptcy that need to be ironed out and a veto is possible.
The Clinton administration has criticized some of the bankruptcy provisions,
argues that the tax cuts are too big and wants the minimum wage increase put
into effect in two rather than three years.
The vote on the abortion
clinic issue was 80 to 17, with 35 Republicans joining all Democrats in support
of the proposal. But Republicans made clear they would try to change or drop the
language in conference. "We will in good faith in conference correct the
amendment and . . . resolve any problems at that time," Hatch said.
Republicans had complained that Democrats and Gore were engaging in
political "theater" and insisted that existing law already bars bankruptcy
filings intended to escape the consequences of "willful and malicious" actions.
But Democrats said existing law is inadequate, pointing to recent cases
in which antiabortion protesters have filed for bankruptcy after being fined or
ordered to pay damages for violence they were alleged to have caused. They cited
bankruptcy actions by Operation Rescue's Randall Terry after a court awarded $
1.6 million to people who sued him and by individuals in an Oregon group that
operated a World Wide Web site called "Nuremberg Files" and that faces $ 109
million in damages.
"This issue is not about theater," said Sen. Patty
Murray (D-Wash.). "It is about the very real issue of violence against women,"
and "violent extremists" should not be allowed to exploit the bankruptcy code to
carry out their agenda, she said.
Democrats also tried to attach an
amendment on guns to the bankruptcy bill but lost. The proposal, sponsored by
Sen. Carl M. Levin (D-Mich.), would have barred gun manufacturers and dealers
from escaping court judgments by declaring bankruptcy. It was defeated 68 to 29.
Several gun manufacturers have declared bankruptcy to avoid liability resulting
from product liability suits.
Credit card companies and other proponents
of the bill contend that legislative changes are needed to keep people who can
afford to repay debt from exploiting loopholes in current law to escape their
liabilities. Creditors say they must charge higher fees to people who do pay
their debt in order to cover the costs of those who don't.
Consumer
groups and many Democrats say lenders' liberal credit policies and aggressive
sales practices have been equally responsible for putting many Americans over
their heads in debt.
They say any legislation also should force credit
companies to be more responsible by providing more consumer information.
In a defeat for business, the legislation includes a provision that
would require credit card companies to warn consumers that paying the minimum
amount due will add significantly to their interest costs. It also requires them
to provide a toll-free phone number where consumers can learn how long it would
take to eliminate a balance when making just the minimum monthly payment.
Consumer bankruptcies have escalated more than 80 percent since 1990.
Last year, nearly 1.4 million bankruptcies were filed, about the same as in
1998. The overwhelming majority of debtors file under Chapter 7, which
effectively wipes away their debts. Only about one-third file under Chapter 13,
which requires some repayment.
According to a study funded by the
American Bankruptcy Institute, about 3 percent of the people who file under
Chapter 7 could repay a portion of their debt under Chapter 13. The credit
industry has estimated the number to be 10 percent to 15 percent.
LOAD-DATE: February 03, 2000
